AT&T Unveils New Phone System With Some Powers of a Computer

American Telephone & Telegraph unveiled a new system Monday to give the ordinary household telephone some of the powers of a personal computer.

Using AT&T's new "smart card," a tiny computer chip encased in plastic, and a special card reader attached to the phone, any touch-tone phone could be used to complete banking transactions, ticket purchases and other financial tasks.

The system, expected to cost well under $100, should be available for limited consumer tests later this year. Widespread consumer sales are not expected for several years.

The smart card is AT&T's latest attempt to extend the power and convenience of at-home banking and other personal computer programs to consumers who have been put off by the price tag and user-unfriendliness of PCs.

More than 93% of American homes have telephones--contrasted with less than 25% that have personal computers--and telephone manufacturers have been trying for years to develop an easy-to-use system to increase the phone's power and scope beyond ordinary conversation.

However, efforts so far have been less than successful.

"This system has been talked about for years and it keeps coming back," said Gary Arlen, a telecommunications analyst in Bethesda, Md. "It's a matter of mixing the technology with the right application to create a system that is cheap and a no-brainer to use."

Last year, the company put on indefinite hold an effort to develop a "smart phone" that combined the touch-tone features of a phone with a computer-like screen. The system, developed with an Ohio bank and designed primarily for at-home banking, proved too costly and difficult for the average consumer.

AT&T is pinning a lot of its hopes on its smart card technology. The cards, about the size of an ordinary credit card, are equipped with a tiny, 8-bit microprocessor and enough memory to hold the equivalent of several typewritten pages of information.

Once programmed by the consumer, the cards are slipped into a special card reader attached to the phone. Information is transmitted to and from the card over the phone lines depending on the instructions issued by the consumer by tapping on the phone's keypad.

One early use, the company said, will be for at-home banking. Another will allow consumers to purchase electronic travel and entertainment tickets. After consumers purchased airline reservations or concert seats, for example, their clearance and seat assignment would be programmed on the smart card. Once the ticket was read on an electronic device at the airport or theater, the purchaser would be admitted.

Other planned uses for AT&T's smart card include toll road fee payments. Under this application, set to begin later this year on three new toll roads in Orange County, commuters would prepay tolls and program that information onto their smart cards. Rather than stopping to pay the tolls, the drivers simply slow as they pass toll booths and flash their cards across a scanner, which deducts the appropriate fee.